Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Work in Progress: Eleonora Freddi

What Did States Do? An Analysis of Historical Public Expenditures
10:45-11:45, T 50A

By exploring historical
fiscal systems, this paper provides new evidence on the productive side of
state capacity. Using a novel dataset, we descriptively analyze the structure
of public spending in the main European countries during the 19th century. Data
show that the share of civil expenditures increased over time relative to
military spending. To explain cross-country differences in civil expenditures,
we explore the relation between central government expenses and local public
spending, as well as poor reliefs. The latter constituted the preliminary form
of public assistance. We find that countries with a small relative share of
civil expenditures also recorded low local expenses, but spent more on paupers.
Using our dataset, we confirm the positive impact of political transformations
on public expenditures found by Dincecco and Katz (2016). Controlling for the
amount spent on the poor, we also find a positive effect of the productive
capacity of the state on economic growth.